Comment on ‘Responsibility for the third world factory: limits of eurocentric CSR and making room for the state’

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The outsourcing by MNCs to third world factories and their consequent impact on social, environmental and economic outcomes are an important area of research. From a perspective of corporate social responsibility, this stream of literature (Cramer 2008; Ciliberti et al. 2008) covers how international best practices and positive benefits are transferred by firms to their supplier country environments. Porter and Kramer (2006, 2011) enlarge the scope of such practices and position CSR to include voluntary activities by corporations that go beyond legal compliances in the host country. In that sense, compliance with local laws on social contracts such as labour laws, environmental standards are presumed to be the starting point of CSR practices. Crane et al. (2014) critique that social and environmental standards are given a short shrift by business firms, to which Porter and Kramer respond that meeting legal requirements and some sense of social responsibility is perquisite to creating shared value. Lu et al. (2014) argue that CSR involves activities taken by companies in excess of legal requirement. ISO 26000 lay down rules for business to be conducted in a socially responsible way, and European Commission has published a 2011–2014 strategy for CSR, requiring enterprises to integrate social, environmental and ethical practices to be integrated in business operations of European Companies. In April 2014, European Parliament passed a law that would make it mandatory for companies to ‘address ‘‘policies, risks and results’’ in relation to ‘‘social, environmental and human rights impact, diversity and anti-corruption policies’’ in their annual reports. Thus, context of CSR practices by firms must be seen as distinct from regulatory function of governments to ensure equitable and social justice, which also includes a power to regulate misuse of common property resources. As argued above, CSR practices must be seen and exercised in excess of legal requirements to ensure minimum social, ethical and environmental standards. Recent changes to The Companies Act, 2013 with respect to CSR by Indian Government reflect spending the CSR monies out of net profits of company on activities which are totally divorced from activities conducted in ‘normal course of business’. The author focuses on MNC/TNCs supplier factories in third world and argues that it may not be right for state to cede the right to provide social good to businesses/TNCs, and that, quote ‘state has to actively engage in provision of labour benefits, ensuring allowances/wages for lean periods, social security, medical and health benefits, technology and infrastructure for environmentally safe practices, unquote, appears to maintain that distinction. The argument that TNC imposed foreign CSR on supplier G. K. Agrawal (&) Institute of Rural Management Anand, Anand 388001, India e-mail: girish@irma.ac.in